Industry Is On The Ropes After A One-Two Punch

Ouch. March is shaping up to be a left-hand lead following February's hard uppercut to the auto business.

The industry, finishing round three of 12--making for the worst year-long bout in recent memory--will need a good cut man next week if Edmunds is right. Sales this month, per Edmunds.com projections, will be 1.33 million units--a 13.2% decrease from the month last year, although a 13.9% increase from February 2008.

Still, it could be worse. This month actually has two fewer selling days than the month last year; with that figured in, the drop is only 6.5% from March 2007.

Edmunds sees Chrysler LLC faring the worst. Adjusted for the two fewer days to sell cars versus the month last year, Chrysler will post an 11.4% drop, per Edmunds. Ford and GM--again with two days off taken into account--will be down 8.6% each; Toyota sales are likely to be off 6.3% versus last March. As Edmunds sees it, only Honda and Nissan will slip through the month-long odyssey relatively unscathed. Nissan's sales for the month will, per Edmunds, slip 1.3% versus the month last year, and Edmunds gives Honda a slight uptick of 0.5%.

"Some shoppers seem to be waiting for dramatic incentive announcements that seem inevitable, while other consumers are likely more focused on general economic and personal financial concerns," it says.

The firm sees market share for the domestics--Chrysler, Ford and General Motors--at 51.1%, down from 52.7% in March 2007 and down from 52.2% last month.

"It's basically a continuation of the first two months: weak demand, the only bright segments being compacts and other, more gas efficient vehicles," says Jesse Toprak, executive director of industry analysis for Edmunds.

He says the first half of the year is likely to be 6% off last year's numbers. And the second half will be stronger because of seasonality. "But there may also be some clarity and stability in the housing market, although we don't expect full recovery," he says. "Also, higher loan limits will help, and the introduction of significant new pickups."

In the fourth quarter, Ford will roll out a revamped F-150 pickup, and Dodge its new Ram 1500. "When that happens, we may see an uptick in sales," says Toprak.